Financing and Capital Markets

Mastering the Top Financial Challenges in Higher Education

Mastering the Top Financial Challenges in Higher Education

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[Jill Fields] One of the issues that I think creates the greatest stress for a higher learning institution is really how you attract and retain the right students, and do so at a price point that still conveys value and allows you to compete effectively, but also allows you to balance your budget.

[Carl Bergeron] The tuition that a university receives in most cases does not cover all of the cost, because really what universities are looking at is net tuition revenue, which is after financial aid, after discounting, after government aid, and that number comes down to what really is there to cover the operations, and in most cases, in this competitive environment, it’s not enough.

[Jill Fields] So really, that challenge has to be met by how much of the budget gets allocated toward education, how much is getting allocated toward housing, how much is getting allocated toward faculty.

[Carl Bergeron] Students, faculty, budget, fundraising, are all intertwined in the ultimate success of how the institution’s doing today and where they want to go.

[Jill Fields] It’s how do you take what you have and where you want to go and make it meet. And that’s the challenge.

[transition copy] Make your master plan your reality check

[Jill Fields] A master plan is important to an institution of higher education primarily because it’s part of their strategic plan.It’s important to be thinking about where you’re evolving, where you are, where you need to go, how you meet the needs of your entire community, including faculty, administration, students. And so it’s really a very overarching process that engages the entire community.

[Carl Bergeron] You have to make sure that you have the capability to implement. So I kind of look at the campus master plan as an important tactical piece of the strategic plan that then the board and the faculty and the administration can check back and say how are we doing five, 10 years, 15 years down the road on these aspirational goals.

I have a client that is working on a master plan now that, one of the key components that we’re partnering with them on is to provide a debt capacity analysis which is really based on your cash flow and your forecasted cash flow, and what this project’s gonna allow you to do, this is how much, at least mathematically, debt you could afford. And that creates good dialogue and understanding of the way they might approach that particular project from a reality check.

[transition copy] Rely on partners with complementary expertise

[Carl Bergeron] Every university is unique in the way they implement what they’re doing, what they want to be. And so what we’re able to do is come to them and say we have a client that looks like you—not exactly, but here’s how they went about getting there, the good, the bad, the ugly of how they went about it, so we can really coach and help them through their process.

[Jill Fields] There’s no question that when you get to work with a lot of different organizations who do the same kind of work and are trying to face the same challenges and meet them, that you are able to come and bring some examples, and provide some best practices, and share ideas so that you don’t have to reinvent the wheel.

The higher ed CFO may have facilities, they may have risk management, they may have information technology, as well as accounting and finance, so there’s a lot of different areas that may not be their background. If we can bring in different partners who have that expertise and can really help fill in the gap, educate them, bring them resources that they didn’t have access to before, that’s really helpful in making sure that they understand we’re a partner and that we’re not interested in selling a product, but we’re really there to help deliver a solution that meets a problem or a need that they have.

[transition copy]The best advice? Be true to your school

[Carl Bergeron] Stay true to who you are. If you’re a four-year academic liberal arts college, be that and stay focused on it, and be successful at it, and don’t fall prey to expanding that if you’re not ready to do that.

[Jill Fields] Provide your value proposition and deliver that consistently and excellently. And that’s what makes you unique, that’s what makes your alumni love you and support you, and be loyal and give and allow you to execute the programs that you want to.

[Carl Bergeron] And make you a candidate for a new student to say this is where I can be successful.

Institutions of Higher Learning face many financial challenges when it comes to allocating their budgets. SunTrust experts offer their tips for maintaining value for students while advancing the institution’s strategic goals.

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